36462 Federal Register / Vol. 63, No. 128 / Monday, July 6, 1998 / Notices

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3 15 U.S.C. 78s(b)(3)(A)(i).

60, Fort Wayne, Indiana 46801, an

electric public utility subsidiary

company of American Electric Power

Company, Inc., a registered holding

company, has filed an applicationdeclaration under sections 6(a), 7, 9(a)

and 10 and rule 54 under the Act.

I&M proposes to guarantee loan

payments, including principal, interest

and penalties, on a promissory note

(‘‘Note’’) from one of its industrial

customers, Iron Dynamics, Inc. (‘‘IDI’’),

an Indiana corporation, which is

constructing a main mill substation,

power distribution facilities from main

mill to coal preparation facilities, coal

reparation facilities and submerged arc

furnace transformers and vaults

(‘‘Equipment’’) to be installed on IDI’s

property in DeKalb, Indiana, which is in

I&M’s service territory. The Note will

evidence a loan by GE Capital

Corporation (‘‘GE Capital’’) or a similar

lender (‘‘Lender’’) to IDI in an amount

up to $6.5 million to acquire the

Equipment. I&M will supply electric

service to IDI’s facility.

The loan will be made under a loan

agreement (‘‘Loan Agreement’’) which

provides, among other things, that the

interest rate on the Note may be variable

or fixed. The variable interest rate will

be equal to an index rate (‘‘Index Rate’’)

plus 1.75%. On the date the initial loan

is made, the index Rate will be the

interest rate equal to the per annum

interest rate for commercial paper

issued by GE Capital for the period of

time closest to 90-days on such date

(‘‘CPR’’), and the Index Rate will be

adjusted every 90 days and be equal to

the CPR in effect on the tenth day

preceding the end of each 90 day period

during the term of the loan. If, for any

reason, GE Capital does not issue the

commercial paper on the applicable

date, the CPR will be equal to the rate

listed for ‘‘3 Month’’ commercial paper

under the column indicating an average

rate as stated in the Federal Reserve

Statistical Release H. 15 (519) for the

calendar month preceding the calendar

month in which the 90-day period ends.

If, for any reason, the Federal Reserve

Statistical Release H.15 (519) is no

longer published, the CPR will be equal

to the latest commercial paper rate for

high grade unsecured notes of 90-day

maturity sold through dealers by major

corporations in multiples of $1,000, as

indicated in the ‘‘Money Rates’’ column

of the Wall Street Journal, Eastern

Edition, published on the tenth day

prior to the end of each 90-day period

or the first business day thereafter.

Under the terms of the Loan

Agreement, IDI may elect to convert the

interest rate on the Note to a fixed rate.

The fixed rate will be equal to 1.75%

over the average of one, three and fiveyear U.S. Treasuries as published in the

Wall Street Journal on the date of IDI’s

election to convert to a fixed rate. IDI is

responsible to the Lender for any costs

incurred as a result of converting to a

fixed rate.

The Notes will mature in not more

than 96 months and be secured by a first

lien on the Equipment. There will be no

consideration paid by IDI for the

guarantee.

In an alternative to I&M’s loan

guarantee, I&M requests authority to

make a direct loan to IDI and to acquire

the Note on substantially the same terms

as the loan from GE Capital or Lender

to IDI.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–17716 Filed 7–2–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40137; File No. SR–NASD–

98–43]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc. to Extend the Deadline for

Presently Registered Representatives

to Apply for the Equity Trader, Series

55 Examination

June 26, 1998.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 12,

1998, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’) through its whollyowned subsidiary, NASD Regulation,

Inc. (‘‘NASDR’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the NASDR. The NASDR

has designated this proposal as one

constituting a stated policy, practice, or

interpretation with respect to the

meaning of an existing rule under

Section 19(b)(3)(A)(i) of the Act,3 which

renders the rule effective upon the

Commission’s receipt of this filing. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The NASDR is proposing to amend

NASD Membership and Registration

Rule 1032 to change the date by which

registered representatives who currently

trade equity securities in the Nasdaq

Stock Market (Nasdaq) and/or over-thecounter must apply for Equity Trader

registration. Below is the text of the

proposed rule change. Proposed new

language is in italics; proposed

deletions are in brackets.

Rule 1032. Categories of Representative

Registration

* * * * *

(f) Limited Representative—Equity

Trader

* * * * *

Before registration as a Limited

Representative—Equity Trader as

defined in subparagraph (1) hereof may

become effective, an applicant must:

* * * * *

(B) pass an appropriate Qualification

Examination for Limited RepresentativeEquity Trader. Any person who was

performing any of the activities

described in paragraph (f)(1) above on

or prior to May 1, 1998 and who has

filed an application to take this

examination by [(date thirty (30) days

after the effective date of this rule)]

August 31, 1998 must pass the

examination by [(24 months after

effective date above)] May 1, 2000. Any

person who is eligible for this extended

qualification period and who fails this

examination during [such] the twentyfour (24) month time period

commencing on May 1, 1998 and ending

on May 1, 2000 must wait thirty (30)

days from the date of failure to take the

examination again. Any person, other

than a person who is eligible for the

extended qualification period, who files

an application to take this qualification

examination after [(date thirty (30) days

after the effective date of this rule)] May

1, 1998 must pass this examination

before conducting such activities as

described in paragraph (f)(1) above. In

no event may a person who is eligible

for the extended qualification period

function as an Equity Trader beyond the

24-month period without having

successfully passed the appropriate

qualification examination.
Federal Register / Vol. 63, No. 128 / Monday, July 6, 1998 / Notices 36463

4See Securities Exchange Act Release No. 39516,

63 FR 1520 (January 9, 1998) (order approving File

No. SR–NASD–97–21).

5Registered representatives who have been

‘‘grandfathered’’ from taking the Series 7 or the

Series 62 examinations will not be required to take

either examination in order to take the Series 55

examination. 6 15 U.S.C. 78o–3(b)(6).

7 15 U.S.C. 78s(b)(3)(A).

8 17 CFR 19b–4(e).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

NASDR included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. The NASDR has

prepared summaries, set forth in

sections A, B and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

On January 2, 1998, the Commission

approved the NASD’s proposal to

amend NASD Rule 1032 to add an

additional category of representative

registration.4 Specifically, Rule 1032(f)

requires each registered representative

who engages in proprietary or agency

trades of equities, preferred securities or

convertible debt securities otherwise

than on a securities exchange, or who

directly supervises such activities (i.e.,

functioning as an ‘‘Equity Trader’’), to

register as a Limited RepresentativeEquity Trader. In order to register as a

Limited Representatives-Equity Trader,

the representative must be registered as

a General Securities Representative or as

a Limited Representative-Corporate

Securities, and must pass the Series 55

examination.5 The rule contains an

exemption for representatives whose

principal trading activities involve

executing orders on behalf of an

affiliated investment company that is

registered with SEC under the

Investment Company Act of 1940.

The rule provides that presently

registered representatives who file an

application to take the Series 55

examination within 30 days of the

effective date of the rule must pass the

Series 55 examination within 2 years of

the effective date of the rule. The

effective date of the rule was April 1,

1998, which was announced in Notice

to Members 98–17. Accordingly, a

presently registered representative had

until May 1, 1998 to file an application

to take the Series 55 examination and

until May 1, 2000 to receive a passing

score on the exam. The rule also

provides that any person, including a

presently registered representative, who

files an application to take the Series 55

examination after May 1, 1998 must

pass the Series 55 examination before

functioning as an Equity Trader.

It has come to the NASDR’s attention

that many presently registered

representatives who would have been

eligible for the two year grace period to

pass the Series 55 examination failed to

file applications by May 1, 1998. Thus,

such registered representatives must

immediately cease functioning as Equity

Traders until they pass the Series 55

examination. As discussed above, the

original proposal provided presently

registered representatives 30 days from

the effective date of the rule to file

applications to take the Series 55

examination. The NASDR believed this

would provide such representatives

sufficient time to file the requisite

applications. Unfortunately, this has not

been the case. If the deadline is not

extended, those registered

representatives who failed to file

applications by the deadline will be

forced to cease certain activities, which

could cause disruptions at NASD

member firms and could cause harm to

customers. The NASDR does not believe

the markets or customers will be served

by a strict application of this

administrative deadline. Consequently,

the NASDR is proposing to extend the

deadline for filing an application from

May 1, 1998 until August 31, 1998. This

will allow a registered representative

who had been eligible for the two year

grace period but failed to file an

application by May 1, 1998 to file an

application by August 31, 1998 and

continue to function as an Equity Trader

until he/she receives a passing score on

the Series 55 examination. However,

such registered representative cannot

continue functioning as an Equity

Trader after May 1, 2000 unless he/she

receives a passing score on the Series 55

examination before May 1, 2000. Any

person not functioning as an Equity

trader on or before May 1, 1998 must

pass the Series 55 examination before

functioning as such.

2. Statutory Basis

The NASDR believes the proposed

rule change is consistent with Section

15A(b)(6) of the Act,6 which requires,

among other things, that the

Association’s rules must be designed to

prevent fraudulent and manipulative

acts and practices, to promote just and

equitable principles of trade, and, in

general, to protect investors and the

public interest. The NASDR believes the

proposal is consistent with the Act

because it continues to require presently

registered representatives to receive a

passing score on the Series 55

examination before May 1, 2000 and to

cease conducting certain specified

activities if a passing score is not

received by that date. The proposed

change only allows certain registered

representatives additional time to file

applications to take the Series 55

examination.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASDR does not believe that the

proposed rule change will impose a

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act, as amended.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change constitutes

a stated policy, practice, or

interpretation with respect to the

meaning, administration or enforcement

of an existing rule of the Association

and, therefore, has become effective

pursuant to Section 19(b)(3)(A) of the

Act 7 and subparagraph (e) of Rule 19b–

4 thereunder.8

At any time within 60 days of the

filing of such rule change, the

Commission may summarily abrogate

such rule change if it appears to the

Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether the proposed rule

change is consistent with the Act.

Persons making written submission

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of the

submissions, all subsequent

amendments, all written statements

with respect to the proposed rule
36464 Federal Register / Vol. 63, No. 128 / Monday, July 6, 1998 / Notices

9 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 39819

(March 30, 1998) 63 FR 16841 (April 6, 1998).

4See letter from Robert E. Aber, Senior Vice

President and General Counsel, Nasdaq, to Richard

Strasser, Assistant Director, Division, of Market

Regulation (‘‘Division’’), SEC, dated April 29, 1998.

Securities Exchange Act Release No. 39819

discussed Amendment No. 1 and Amendment No.

2 to the filing, which were filed with the

Commission on March 25, and 26, 1998,

respectively.

5See Securities Exchange Act Release No. 39936

(April 30, 1998) 63 FR 25253 (May 7, 1998).

6See letter from Robert E. Aber, Senior Vice

President and General Counsel, Nasdaq, to Richard

Strasser, Assistant Director, Division, SEC, dated

June 24, 1998.

7On August 29, 1996, the Commission

promulgated a new rule, the Limit Order Display

Rule (Exchange Act Rule 11Ac1–4) and adopted

amendments to the Quote Rule (Exchange Act Rule

11Ac1–1), which together are designed to enhance

the quality of published quotations for securities

and promote competition and pricing efficiency in

U.S. securities markets (collectively, the ‘‘Order

Handling Rules’’). See Securities Exchange Act

Release No. 37619A (September 6, 1996) 61 FR

48290 (September 12, 1996).

8See Securities Exchange Act Release No. 38294

(February 14, 1997) 62 FR 8289 (February 24, 1997)

(approving temporary suspension of PMM

standards); Securities Exchange Act Release No.

39198 (October 3, 1997) 62 FR 53365 (October 14,

1997) (extending suspension through April 1, 1998);

Securities Exchange Act Release No. 39819 (March

30, 1998) 63 FR 16841 (April 6, 1998) (extending

suspension through May 1, 1998); Securities

Exchange Act Release No. 39936 (April 30, 1998)

63 FR 25253 (May 7, 1998) (extending suspension

through July 1, 1998).

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room, 450 Fifth Street, NW.,

Washington, DC. Copies of such filing

also will be available for inspection and

copying at the NASD. All submissions

should refer to File No. SR–NASD–98–

43 and should be submitted by July 27,

1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–17710 Filed 7–2–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40140; File No. SR–NASD–

98–26]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Partial Approval to

Amendment No. 4 to Proposed Rule

Change by the National Association of

Securities Dealers, Inc. to Institute, on

a Pilot Basis, New Primary Nasdaq

Market Maker Standards for Nasdaq

National Market Securities

June 26, 1998.

I. Introduction

On March 19, 1998, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly-owned subsidiary, The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’),

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Exchange Act’’) 1 and Rule

19b–4 thereunder,2 a proposed rule

change to: (a) implement, on a pilot

basis, new Primary Nasdaq Market

Maker (‘‘PMM’’) standards for all

Nasdaq National Market (‘‘NNM’’)

securities; (b) extend the NASD’s Short

Sale Rule pilot until November 1, 1998;

and (c) extend the suspension of

existing PMM standards until May 1,

1998. On March 30, 1998, the

Commission issued notice of the filing

and approved, on an accelerated basis,

the portions of the filing extending the

NASD’s Short Sale Rule pilot and the

suspension of existing PMM standards.3

On April 30, 1998, Nasdaq filed

Amendment No. 3 to the proposal,4

proposing to: (a) extend the comment

period by 30 days to May 27, 1998; (b)

continue to suspend the current PMM

standards until July 1, 1998; (c) extend

the NASD’s Short Sale Rule pilot until

January 4, 1999; (d) change the dates

during which the PMM pilot would run

to July 1, 1998, through January 4, 1999;

and (e) amend subparagraph (g) of

NASD Rule 4612 to change the method

for determining how market makers that

are not managers or co-managers in an

underwriting syndicate of a secondary

offering may qualify as PMMs. Also on

April 30, 1998, the Commission issued

notice of Amendment No. 3 and

approved, on an accelerated basis,

Nasdaq’s request to continue to suspend

the current PMM standards until July 1,

1998.5 The Commission also extended

the comment period for the proposed

rule change.

On June 24, 1998, Nasdaq filed

Amendment No. 4 to the proposal,6

proposing to: (a) extend the comment

period to July 27, 1998; (b) continue to

suspend the current PMM standards

until October 1, 1998; and (c) change the

dates during which the PMM pilot

would run to October 1, 1998, until

April 1, 1999.

Background

Presently, NASD Rule 4612 provides

that a member registered as a Nasdaq

market maker pursuant to NASD Rule

4611 may be deemed a PMM if that

member meets certain threshold

standards. The implementation of the

SEC Order Handling Rules 7 and what

some perceive as a concurrent move

toward a more order-driven, rather than

a quote-driven, market raised questions

about the continued relevance of those

PMM standards. As a result, such

standards were suspended beginning in

early 1997.8 Currently, all market

makers are designated as PMMs.

Since February 1997, Nasdaq has

worked to develop PMM standards that

are more meaningful in what may be an

increasingly order-driven environment

and that better identify firms engaged in

responsible market making activities

deserving of the benefits associated with

being a PMM, such as being exempt

from NASD Rule 3350, the NASD’s

Short Sale Rule. The NASD now

proposes to extend the current

suspension of the existing PMM

standards and to implement new

standards on a pilot basis from October

1, 1998, until April 1, 1999. The NASD

intends the new standards to better

evaluate whether a market maker

provides meaningful liquidity to the

market. To determine whether a

particular market maker is such a

provider of liquidity, Nasdaq will

analyze that market maker’s trading

activity using a new test.

For the reasons discussed below, the

Commission has determined to grant

accelerated approval of Nasdaq’s

request, in Amendment No. 4, to

continue to suspend the current PMM

standards until October 1, 1998.

Further, given the proposal’s complexity

and the Commission’s desire to give the

public sufficient time to consider the

proposal, the Commission has extended

the comment period to the proposed

rule change, as amended, to July 27,

1998.

II. Proposed Rule Change

As discussed in detail in Securities

Exchange Act Release No. 39819,

Nasdaq is proposing a new set of PMM

standards. In the current filing, Nasdaq

would amend the timing of the

proposed pilot through which the

NASD, the SEC, and the public may

evaluate those new standards.

* * * * *